According to Colin Butler, executive vice president of capital markets at Mega Matrix, regulatory uncertainty around stablecoins could put classic banks at a greater disadvantage than cryptocurrency companies.
Butler said financial institutions have already invested heavily in digital asset infrastructure but are still unable to fully implement it while lawmakers debate how stablecoins should be classified. “Their legal counsels are telling their boards that capital expenditure cannot be justified until it is known whether stablecoins will be treated as deposits, securities or a separate payment instrument,” Cointelegraph said.
Several enormous banks have already established some of the infrastructure needed to support stablecoins. JPMorgan developed the Onyx blockchain payments network, BNY Mellon launched digital asset custody services, and Citigroup tested tokenized deposits.
“Infrastructure spending is real, but regulatory ambiguity limits the scale of these investments because risk and compliance functions do not give the green light to full implementation without knowing how the product will be classified,” Butler argued.
On the other hand, crypto companies that have been operating in regulatory gray areas for years would likely continue to do so. “Banks, on the other hand, cannot operate comfortably in this gray zone,” he added.
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The yield gap may result in deposit migration
Another problem is the growing gap between the returns available on stablecoin platforms and those offered by classic bank accounts. Exchanges often offer 4% to 5% of stablecoin balances, Butler said, while the average U.S. savings account yields less than 0.5%.
He said history shows that depositors move quickly when higher yields are available, pointing to the shift toward money market funds in the 1970s. Today, that process could happen even faster because it takes only a few minutes to transfer funds from bank accounts to stablecoins and the difference in yields is greater.
Meanwhile, Fabian Dori, chief investment officer at Sygnum, said the competitive gap between banks and cryptocurrency platforms is significant but not yet critical. He said large-scale deposit flights are unlikely in the near term as institutions continue to prioritize trust, regulation and operational resilience.
“But asymmetry could accelerate migration at the margin, particularly among corporations, fintech users and global active customers who already move liquidity freely between platforms,” Dori said. “When stablecoins are treated as productive digital cash rather than cryptocurrency trading tools, competitive pressures on bank deposits will become much more visible,” he added.
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Fishing restrictions could push activities abroad
Butler also warned that attempts to limit the profitability of stablecoins could unintentionally drive activity into less regulated areas. Under current U.S. law, stablecoin issuers are prohibited from distributing profits directly to holders. However, exchanges may still offer returns through lending, staking or promotional rewards programs.
If lawmakers impose broader restrictions, capital could move to alternative structures such as synthetic dollar tokens. Products like USDe Etheny generate profits through derivatives markets rather than classic reserves. These mechanisms can offer returns even if regulated stablecoins cannot.
According to Butler, if this trend accelerates, regulators could face the opposite effect of what was intended, with more capital flowing into cloudy offshore structures with less consumer protection. “Capital never stops looking for profits,” he said.
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